<Is KLIC, at this point, too important to fail?>
KLIC isn't going to close their doors, as they have $175m in cash. I estimate they won't be in any danger of a liquidity crisis, unless current business conditions continue until their next set of convertible notes become due in 2012. They feel comfortable enough, to buy back the 2010 notes early.
If any other company wanted to do what KLIC does, the simple method would be to buy KLIC shares. It would be cheaper and quicker to do a takeover, than try and take market share or build up a competitive business. I think they have a "poison pill", but if the company ever did run out of cash, that's what would happen.
Their core business is ball bonding, in which they have 40% market share. I'm not sure how their die bonding business, from the Alphasem acquisition in 2006, is doing. They have long-term relationships with their customers. Chips are useless if they aren't connected to anything, which is what KLIC's machines do.
<if it closed doors tomorrow>
I estimate near-zero probability of that happening before 2012, and small (5%) probability after that.
<KLIC is my fondest memory of 1999>
I can summarize what's happening since then: Up. Down. Down more. Repeat.
KLIC remains the same kinky go-go high-beta mini-cap it's always been. An investment in KLIC, is like playing poker, and going "all in" every hand, while looking at only half the cards. Never boring.
disclosure: bought at $1.52 and $1.42 earlier this week, sold half today at $1.65. Sell the other half tomorrow, if KLIC can't stay above its 50dma (now at $1.61). If it does hold that line, I'll wait a bit and sell at around $2. Buy back at $1.52 and every $0.10 on down. |
